1981 (7) TMI 111 - AT - Income Tax

Summary

Issues:
1. Jurisdiction of the Assistant Controller to make reassessment under section 58(3) read with section 59 of the Estate Duty Act, 1953.

Detailed Analysis:
The accountable person filed an appeal against the order of the Appellate Controller, Ernakulam. The issue revolved around the commencement of reassessment proceedings beyond the statutory limit of three years from the original assessment date. The accountable person argued that the reassessment was initiated by the notice under section 59 issued on 28-8-1974, exceeding the three-year limit from the original assessment date of 31-7-1971. They relied on legal precedents to support their contention that the notice to the accountable person is crucial for the commencement of proceedings (paragraphs 2-3).

The department contended that the direction to issue the notice under section 59 on 10-5-1974 by the Assistant Controller was sufficient to commence the reassessment proceedings within the statutory limit. They argued that no specific pre-reopening enquiry was necessary, and the Controller's satisfaction to reopen sufficed. Legal precedents from tax laws were cited to support this argument (paragraph 4).

The Tribunal analyzed the provisions of section 59 and compared them with similar provisions in income tax laws. It emphasized that for reassessment proceedings to commence, the Controller must actively requisition an account from the accountable person after entertaining reasons for reassessment. This active step is essential for the initiation of reassessment proceedings under section 59 (paragraphs 5-6).

The Tribunal disagreed with the department's reliance on precedents related to income tax laws, highlighting the distinct requirements under the Estate Duty Act for reassessment proceedings to commence. The decision emphasized the necessity of communication to the accountable person for the proceedings to be considered initiated (paragraph 7).

Further, the Tribunal discussed the requirement of communication to the assessee for the commencement of reassessment proceedings, drawing parallels with legal interpretations from relevant cases. It concluded that the reassessment in question was barred by limitation as the proceedings were not validly commenced within the statutory limit, leading to the cancellation of the reassessment (paragraphs 8-10).

Finally, as the reassessment was deemed invalid, the Tribunal did not consider the other grounds raised in the appeal, ultimately allowing the appeal in favor of the accountable person (paragraphs 11-12).